New York delegation celebrates aid for dairy farmers

Farmers struggling to keep afloat amid record-low dairy prices are about to get $290 million in aid checks from the federal government, under a plan that particularly benefits the smaller, often family-owned operations of the northeast at the expense of large commercial dairies in California and Wisconsin.

Lawmakers from New York, including Sen. Chuck Schumer, D-N.Y., Sen. Kirsten Gillibrand, D-N.Y., and Rep. Scott Murphy, D-N.Y., today are all claiming victory over the distribution plan for the dairy dollars announced by Agriculture Secretary Tom Vilsack.

“Dairy farmers are the backbone of New York’s agricultural economy, and they are in the middle of the worst crisis in recent memory,” Schumer said. “This congressional aid could not come a moment too soon.”

Murphy said the payments “will help to ease the burden” on dairy farmers, while Congress considers long-term policy changes “to stabilize the dairy market.”

Gillibrand also characterized the emergency aid as “only a temporary solution to the fundamental problems with the dairy pricing system.”

Under the distribution plan announced today, $290 million will be delivered to farmers in direct payments based on their total pounds of production from February 2009 to July 2009 — multiplied by a factor of two. The payment rate will be about $0.32 per 100 pounds (or hundredweight). The payments will be capped at 6 million pounds of production, a threshold that is effectively 300 cows or fewer and accommodates most New York dairies, which on average produce 2 to 3 million pounds annually. The program also is limited to farmers whose annual average adjusted non-farm income is $500,000 or less. Under that payment scheme, payouts would be effectively limited to $19,200.

Schumer’s office estimates that New York farmers will take in about $40 million under the payment plan, based on USDA statistics.

(Continue reading after the jump for a county-by-county breakdown and how New York lawmakers are highlighting their role in the emergency aid).

In October, Congress passed legislation that committed $350 million in dairy relief, including $60 million to buy cheese and other dairy products to reduce market surplus. But Vilsack has spent weeks deciding how to divvy up the remaining $290 million of aid, which was designed to go out in direct payments to farmers.

The distribution question pitted large, commercial dairies in California and other states against smaller operations in the Northeast. Sen. Barbara Boxer, D-Calif., was so worried that a distribution plan would put the larger farms in her state at a disadvantage that she met with Vilsack personally to discuss the issue.

The aid checks will be sent automatically to farmers, with the USDA calculating the payments based on the previous production stats.

Milk prices hit record levels in 2007, when they fetched an average $21.70 per hundredweight. But in the first five months of this year, milk prices fell to less than $12 per hundredweight — average prices not seen since 1979.This means production costs are eclipsing the average sales price. New York dairy farmers have estimated it costs them $17 to produce 100 pounds of milk that is selling at market for less than $12 per hundredweight.

Interesting side note: Vilsack’s announcement prompted a flood of news releases from lawmakers with constituents in the dairy sector. The news releases from Schumer and Gillibrand’s offices both included a statement from Dean Norton, president of the New York Farm Bureau. They’re nearly identical — only one mentions just Schumer, and the other gives credit to both of the senators from New York:

From Schumer’s office: “This emergency aid comes just in the nick of time, as dairy farm families struggle through the end of the year with dramatic cash flow problems,” said Dean Norton, president of New York Farm Bureau. “We are hugely grateful to Senator Schumer for getting this emergency aid pumped into the industry in quick fashion. It will surely help keep some of our farms in business to the long-term benefit of the Upstate rural economy.”

From Gillibrand’s office: “This emergency aid comes just in the nick of time, as dairy farm families struggle through the end of the year with dramatic cash flow problems,” said Dean Norton, president of New York Farm Bureau. “We are hugely grateful to Senators Schumer and Gillibrand for getting this emergency aid pumped into the industry in quick fashion. It will surely help keep some of our farms in business to the long-term benefit of the Upstate rural economy.”

The following county-by-county breakdown was produced by Schumer’s office, using stats from the USDA: